Exactly $246,640 drained from corporate accounts pushed a Griswold business to the brink of bankruptcy, according to financial audits that uncovered years of unauthorized mortgage payments and personal credit card charges.
Katey Lanphear, 49, of Griswold was arrested on Monday by detectives with the Eastern District Major Crime Squad, Connecticut State Police said. Software audits and bank reviews ultimately revealed approximately $301,000 in missing funds, though investigators traced $246,640 directly to personal bills.
The 49-year-old employee, who had managed company finances since 2002, faces charges of first-degree larceny, first-degree identity theft, and illegal use of a credit card, the warrant affidavit said. The investigation began in October 2025 when the business owner filed a formal embezzlement complaint.
The financial discrepancies surfaced when the company’s general manager spotted a check posted across two distinct categories in the accounting software’s profit and loss statements. When questioned about the entry, Lanphear called it a mistake and promised to fix it, according to the warrant affidavit.
Suspicious of the explanation, the manager downloaded company bank statements and uncovered charges on unauthorized credit cards alongside direct mortgage payments drawn from corporate accounts. Investigators found a dedicated folder on the business server containing Lanphear’s personal financial records, credit cards, and mortgage documents.
During an October 21, 2025 confrontation regarding a pending mortgage transaction, Lanphear claimed the charges were simply company bills. When pressed further, her hands began to shake and her voice trembled as she grabbed the statements.
“I’ll probably be fired over this. I have a lot of bills,” Lanphear told the owner and manager, according to the warrant affidavit.
The company owner told police that Lanphear was previously caught misusing funds in 2023. She received a reprimand at that time, and the owner believed the issue had been resolved. Over the years, the owner had provided financial assistance to Lanphear, including money for her son’s college expenses.
Following the discovery of the 2025 transactions, consulting accountants warned the owner that the unauthorized withdrawals had pushed the business close to bankruptcy. In September, Lanphear sent a text message to the owner addressing the looming investigation.
“I’m not sure if your intention is to get me to serve jail time, but I have absolutely nothing to give, and my kids need me,” Lanphear wrote in the message cited in the warrant affidavit. “Can you let me know what you are expecting so I know what expect at least?”
The owner did not reply to the message. Investigators executed multiple search warrants for financial records dating back to 2021, uncovering a credit card opened in the owner’s name and tied to Lanphear’s residential address.
Lanphear initially scheduled an interview with law enforcement before canceling to consult an attorney. Investigators report that legal representation never contacted them.
She was released on a $100,000 bond following her Monday arrest. Lanphear is scheduled to face a judge at Norwich Superior Court on Nov. 19.
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